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BOC ends 2016 with record profit before tax

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Ronald C Perera, Chairman, Bank of Ceylon

Bank of Ceylon, closed 2016 with a record 31.2 billion rupees profit before tax with 23 per cent growth, marking the highest ever profit made by a single entity. Profit after tax stood at 24.8 billion rupees resulting in 43 per cent growth.

Net operating income for the period reflected an improvement of 16 per cent mainly backed by the increase in net interest income and increase in other operating income. The reduction of 26 per cent in total impairment charges through a reversal in provision after improved Non Performing Loans (NPLs) also complemented the increase in net operating income. Interest income earned through investment activities, particularly in Sri Lanka Development Bonds and Treasury Bonds also contributed towards the growth in the net interest income.

The reversal of impairment charges against Non Performing Advances (NPA) as a result of persistent efforts in recoveries, sturdy follow ups, strengthened by the continuous improvement in credit quality in the branch network has made significant improvements in Gross NPA ratio at end 2016 to 2.9 per cent compared to 4.3 per cent recorded in December 2015.

Total operating expenses increased by seven per cent in line with business expansion. But, cost to income ratio declined to 43 per cent from 45 per cent compared to 2015.

Meanwhile, BOC strengthened its Balance Sheet by achieving 1.0 trillion rupees in loans and advances, which led the total assets to reach 1.7 trillion rupees as of end 2016, it was a six per cent growth compared to 2015. Loans and advances accounted for 60 per cent of Bank of Ceylon's total assets base and gross loans recorded 20 per cent growth YoY. Personal loans, terms loans and overdraft contributed mostly to the growth momentum in the loan portfolio.

The Bank's Return on Average Assets (ROAA) ratio was 1.9 per cent while Return on Average Equity (ROAE) ratio stood at 28.4 per cent, portraying the Bank's ability to generate healthy returns for stakeholders despite the increased assets base over the period.

Bank of Ceylon managed to maintain better trade-off between liquidity and interest earning assets. The Bank also continued to sustain Capital Adequacy Ratio (CAR) by maintaining Tier I at 8.7 per cent and Tier II at 12.3 per cent against the Central Bank's minimum requirements of five per cent and ten per cent respectively.